Outsourcing Logistics- Simply Beneficial

 Hello everyone, I am Peeyush Pareek, pursuing my MBA second year from Amrita School of Business, Coimbatore. In this blog I am going to share Some gyaan on “Outsourcing Logistics" 

 
Out sourcing is the using some service of product, which we have taken from others to employ in our system, it can be paid or may be unpaid. 

 

If we look around the companies, we see some of them outsources services like logistics but some of them don’t. Today I will share some of the benefits of outsourcing the logistics. 

In past as companies used to do all of their work by them which included logistics, But it was not their main stream job, so they were not so efficient in that, now if outsource it we see the service providers do it efficiently as they have more experience with it , dedication is full on to the logistics. 

For the companies which for example manufacturers, the fixed costs will be reduced, the capital used in the logistics operations can be reduced for example the trucks will need the spaces for parking, the material which has to transported will be always with the company only etc. Reduction of manpower and less salaries will be paid. Work will be less as the paper work of permits, insurance, payments will be reduced.  

It will also reduce the liabilities, as the moving goods always has to be looked after and will be a liability and possibilities are that if there is something undesirable happens, factory owners will less likely to have relations with other logistic companies so it will be so tough to switch the vehicles if their location is far away that point of time. But logistic companies are interlinked and they are way more efficient in these kinds of case handling.  

Little expenses like insurance charges, warehouse charges, docking charges, and distribution charges like if they material is supplied in a single city to various other dealers reduces significantly. This will also reduce the work for the accounting department and they can focus on the other mainstream accounting. 

If the goods move faster, the customer will be satisfied as well as this can contribute significantly to the inventory turnover. So, more profits can be yielded. Since, the tracking is one of important part, the company doesn’t have to employ the services for tracking, that will employ more capital in it. More Work force will be needed, software will be expensive, so why not save that cost.     

Finally, if we see, outsourcing will reduce too many direct and indirect costs, most importantly it will reduce the area to be focused and will help the company to just efficiently produces and serve the demand. 

 

More goods with better quality, less cost, better inventory turnover, fast to satisfy customer, will surely make BIG DIFFERENCE to make BIG REVENUES.